CUSTOMER PERSPECTIVES ON SERVICE FAILURES

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INTHETOURISM AND HOSPITALITY INDUSTRY

By Beverley Sparks

CUSTOMER PERSPECTIVES ON SERVICE FAILURES


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CUSTOMER PERSPECTIVES ON SERVICE FAILURES IN THE TOURISM & HOSPITALITY INDUSTRY

Technical ReportsThe technical report series present data and its analysis, meta-studies and conceptual studies, and are consideredto be of value to industry, government and researchers. Unlike the Sustainable Tourism Cooperative ResearchCentres Monograph series, these reports have not been subjected to an external peer review process. As such, thescientific accuracy and merit of the research reported here is the responsibility of the authors, who should be

contacted for clarification of any content. Author contact details are at the back of this report.

EDITORS

Prof Chris Cooper University of Queensland Editor-in-Chief

Prof Terry De Lacy Sustainable Tourism CRC Chief Executive

Prof Leo Jago Sustainable Tourism CRC Director of Research

National Library of Australia Cataloguing in Publication Data

Sparks, Beverley

Consumer perspectives on service failures in the tourism and hospitality industry.Bibliography.

ISBN 1 876685 74 3.

1. Tourism Customer services. 2. Hospitality industry Customer services. 3. Consumer satisfaction. 4.Consumers Attitudes. I. Cooperative Research Centre for Sustainable Tourism. II. Title.

338.4791

2002 Copyright CRC for Sustainable Tourism Pty Ltd

All rights reserved. No parts of this report may be reproduced, stored in a retrieval system or transmitted in anyform or by means of electronic, mechanical, photocopying, recording or otherwise without the prior permission of

the publisher. Any enquiries should be directed to Brad Cox, Director of Communications or Trish OConnor,Publications Manager to [email protected].

Acknowledgements

I would like to acknowledge the excellent research assistance of Tess Collie, Senior Research Assistant, whoworked extensively on this project. Tess assisted with both the data collection and data analysis phrases of thisproject. Her commitment and perfectionist approach is to be commended. Karen Rowe, Research Assistant, alsocontributed to the project, especially with the arduous task of transcribing the focus group conversations. JanetMcColl-Kennedy, University of Queensland was a co-researcher in the early phases of this study.

The Sustainable Tourism Cooperative Research Centre, an Australian Government initiative, funded thisresearch.

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CONTENTS

Chapter 1 Introduction ......................................................................................................................... 1Background .............................................................................................................................................. 1Why does service fail? ............................................................................................................................. 1The approach of this research................................................................................................................... 1

Distributive justice ........................................................ ............................................................... .............................1

Procedural justice.....................................................................................................................................................2

Interactional justice ...................................................... ............................................................... .............................2

A fairness theory approach............................................................. ................................................................ ..........2

Chapter 2 Method ................................................................................................................................. 4Participants ............................................................................................................................................... 4Materials and Procedure........................................................................................................................... 4Chapter 3 Results .................................................................................................................................. 5Service Recovery Typology ..................................................................................................................... 6Affective Responses to Service Failures and Recovery Processes........................................................... 7Thinking About Service Failures and Recovery Processes ...................................................................... 8

Issues related to distributive justice ..........................................................................................................................8

Issues related to procedural justice ..........................................................................................................................9

Issues related to interactional justice........................................................................................................................9

How customer would have felt if some alternative actions had been taken ............................................................10

Moral accountability...............................................................................................................................................10

Other themes ...........................................................................................................................................................10

Chapter 4 Discussion and Recommendations ................................................................................... 12Improving Procedures ............................................................................................................................ 12Training and re-training approaches....................................................................................................... 12Using explanations ................................................................................................................................. 12The importance of effort and communication ........................................................................................ 13Compensation issues .............................................................................................................................. 13

Chapter 5 Conclusions ........................................................................................................................ 14Appendix A ........................................................................................................................................... 15References ............................................................................................................................................. 17Author ................................................................................................................................................... 18

LIST OF FIGURESFigure 1: Generalised Model of Fairness Theory Applied to a Service Failure........................................................3

LIST OF TABLESTable 1: Summary of Service Failures Discussed by Focus Groups.........................................................................5Table 2: Summary of Service Recovery Typology Tangible Recovery Efforts.....................................................6Table 3: Summary of Service Recovery Typology Intangible Recovery Efforts...................................................7

Table 4: Summary of Affective Responses to Service Failure & Recovery .............................................................7Table 5: Summary of Content Relating to Counterfactual Thinking of Potential Service Provider Actions &

Approaches Distributive Justice ......................................................... .....................................................8Table 6: Summary of Content Relating to Counterfactual Thinking of Potential Service Provider Actions &

Approaches Procedural Justice ........................................................... .....................................................9Table 7: Summary of Content Relating to Counterfactual Thinking of Potential Service Provider Actions &

Approaches Interactional Justice ........................................................ ...................................................10Table 8: Summary of Content Relating to Counterfactual Thinking of Potential Service Provider Actions &

Approaches Moral Accountability.........................................................................................................10

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Chapter 1

Introduction

This project focuses upon the topic of service failure and recovery processes in the tourism sector.This report investigates the consumer thought processes and responses associated with service failure/recovery events. Thus, the perspective of the customer, including the assigning of meaning tooutcomes and actions associated with the service failure/recovery process, is paramount in this report.As a result, an overall aim of this research was to achieve a better understanding of how customersthink and feel about service failures and subsequent recovery process.

Background

In order to sustain a business it is important to have satisfied customers. Satisfied customers are morelikely to return, as well as recommend the product to others. On the other hand, dissatisfied customers

are more likely to engage in behaviours that negatively impact upon a business. For instance, negativeword of mouth or switching to another product. In addition, a dissatisfied customer is more likely toalso experience negative emotions such as anger and frustration, which can also impact directly ontoservice personnel. In many cases customer dissatisfaction arises because of some failure in the servicesystem. The impact of this failure will vary as a result of what, if any, service recovery tactics areimplemented.

Why does service fail?

The tourism and hospitality industry offers a range of services, including accommodation, food andbeverage, transport, tours and attractions. Like all service industries, the services provided within thetourism and hospitality sector have several things in common, which distinguish them from the

products offered by manufacturing and other commercial sectors. For example, services are relativelyintangible, and they are characterised by simultaneous production and consumption. Thus, it isdifficult to observe tourism and hospitality services in advance and even harder to try before youbuy. The provision of services is often immediate and spontaneous. Successful service provisionrequires a matching of expectations and behaviours, a task that is difficult to achieve under conditionsof time pressure and inter-customer variability. For all these reasons, achieving a situation of zerodefects is quite difficult and inevitably service failures sometimes occur.

The approach of this research

This research draws upon ideas and knowledge that has been built up using what is known as justice orfairness theories. A wide range of past research has been conducted in this area but in the past it has

primarily investigated justice issues within legal and organisational settings. More recently, there hasbeen a growing interest in applying some of these principles to the area of service failure. Here, theidea is that customers levels of satisfaction and their future loyalty depend upon their views as towhether or not they were treated fairly, that is, whether justice was done.

Distributive justice

Distributive justice is generally understood to focus on the actual objective outcome of the servicerecovery. This could include financial compensation such as a refund or discount off the service thatwas defective. Research primarily undertaken in the organisational behaviour field and based onequity theory reveals that an outcome will be evaluated in terms of its perceived equity (Adams 1963).It is argued that a person will evaluate the outcome based upon a ratio of inputs to outputs. It ispossible that an outcome may even be perceived as too high, or too different from what others receiveand, as a result, be perceived as inequitable (Adams 1963). Similarly other research has suggested that

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the form and value of the compensation should match the explanation given for service failure (Sparks& Callan 1996).

Procedural justice

Another form of justice is referred to as procedural justice. This form of justice primarily addresses

means used to achieve an outcome. It is argued that procedural justice will affect satisfaction andfairness judgements independently of outcomes. Issues of procedural justice can include actions suchas process control and decision control. Process control refers to whether a customer has anopportunity for input into how the situation is dealt with and is often referred to as voice. Decisioncontrol refers to the extent to which a customer has control over the actual outcome. Procedural justicecan also be influenced by factors such as perceived fairness of organisational policies, waiting time,flexibility and efficiency of the recovery process. Thus, the actions that have been discussed aspossible service recovery responses may be evaluated differently depending upon how they areperceived by customers in terms of procedural fairness.

Interactional justice

A third type of fairness is referred to as interactional justice. That is how the firm manages its responseto a customer who experiences a service failure is likely to be a key determinant of the customerssatisfaction levels and perceptions of the company (Bitner, Booms & Tetreault 1990). As manyservices are largely intangible it is the perceived quality of the interaction between customer andservice provider that influences judgments about satisfaction with a service, A key determinant ofservice quality and customer satisfaction evaluations is service provider empathy, that is, concerndemonstrated on the part of the service provider (Johnston 1995). Similarly, Hocutt, Chakraborty andMowen (1996) found that following a service failure incident, customers were most satisfied whenservice personnel displayed high levels of empathy and responsiveness. Similarly, in a scenario studyof hotels, it was found that the amount of concern a service provider displayed was especiallyimportant to perceptions of satisfactory service recover.

A fairness theory approach

Recently, Fairness Theory has been proposed as a way of integrating much of the justice research(Folger & Cropanzano 1998). This theory can also be helpful for investigating service failure andrecovery processes within the tourism and hospitality sector. This theory can be understood in thefollowing terms. First, there will be an event that will trigger emotional responses in the customer. Forinstance, a delayed flight, a rude service attendant or a meal that is not cooked as requested. Second,how this situation is handled can lead to the customer feeling the same, better or worse. In dealingwith the service failure situation, a service provider might use actions that are classifiable under thedistributive, procedural or interactive justice banners.

Fairness Theory proposes that, following a negative event, people engage in a process referred to as

counterfactual thinking (Roese 1997). Put simply, counterfactual thinking is concerned with thosethoughts about the service incident that are contrary to the fact (imagined things that didnt actuallyhappen). At he core of Fairness Theory is moral accountability for actions or events, which mayimpact on a persons material or psychological well-being. A key to determining moral accountabilityis discretionary conduct, that is, the choice of actions taken from a range of feasible alternatives(coulds). Importantly, Folger and Cropanzano (1998) propose that in trying to determine moralaccountability, a contrast process will be undertaken suing counterfactual reasoning (that is, peoplewill contrast what was done with what could have been done and assess how they wouldfeel if thecontrasted action was taken). Central to Fairness Theory is the notion that some party is accountablefor the action or inaction of the focal event. Hence, when a negative event occurs people may invokecounterfactual thinking by considering what couldhave happened, what shouldhave happened andhow it wouldhave felt had that action been taken. The answers given to these questions enable the

customer to assign moral accountability for the negative event. Figure 1 presents a diagrammatic viewof the processes associated with Fairness Theory. As can be seen the role of counterfactual thinking

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and the assignation of moral accountability is central to the model. Importantly, the assignation ofmoral accountability will depend upon the feasibility of the counterfactuals generated.

Figure 1: Generalised model of Fairness Theory applied to a service failure

IJ

DJ

PJ

Moralaccountability

satisfaction

fairness

Counterfactualthinking

CouldShouldWould

Servicefailureevent

Emotional Response

Emotional Response

This study explored service failure and service recovery processes by focussing upon the idea ofcounterfactual thoughts as a way to better understand what people think of the way they are treated.

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2 Catering (Convention) Vegetarian guest gets meat dish, and is then presented with a mainmeal sized entre of trout when a complaint was made. Should havemade some effort to making a vegetarian meal.

3 Catering (Waitress) Limited time for a meal, waitress brings the wrong meals late,customers pay and leave. Return again and next time get meal for free.

2 Hospitality(Accommodation)

International guest has to wait 3 hours in the lounge room of hotelfoyer whilst room is being made up. They could have put guest into aroom, given a free meal.

2 Hospitality (Camping) Camper gets tent rained out, as the campsite is right in the middle of afield and badly positioned for drainage. Has to sleep in the car.Camper gets compensation.

2 Hospitality (Hotel showerand noisy room)

Shower runs out of hot water in the middle of the shower, and theroom is very noisy. Constant interruptions by tour operators trying tosell tours. This was managements fault, needed to be moreprofessional, not allow people to your room, and make sure showers

work, and move to a less noisy room.

1 Shopping Shopping in Surfers Paradise for authentic Australian souvenirs isalmost impossible as just about everything is made in China.

3 Tour Operator Internet booking for tour in Alaska never booked, but customer wascharged full amount on credit card. Tourist got even by sending lettersof complaint to American Express and Visitors bureau, but has neverheard anything since.

Service Recovery Typology

As we were interested to identify what service recovery tactics customers were exposed to, we soughtthis information in the focus group. Service organisation attempts to recover the failure were classifiedunder the broad headings of either tangible or intangible recovery efforts, and appear in Table 2 andTable 3. As can be seen in Table 2, these efforts are actions that primarily contain something moretangible or concrete, such as a replacement meal or a voucher to be used sometime in the future.

Table 2: Summary of Service Recovery Typology Tangible Recovery Efforts

Recovery Tactic

Performed

Number of

Examples aSample Participant Comment

Core servicereplacement

5 The guy who made the mistake had made such a fuss, comingover [saying] .. all the pizza is on the house, well get youanother one. They brought out another one, but .bigger.

Food & beverage 3 He came up to me and asked if I like red wine, white wine orchampagne, and I said champagne, and then he came back withtwo bottles of really nice French champagne.

Discount/ refund 2 So it worked out reasonably OK we got a refund in the end.

Vouchers 2 They actually sent us a little coupon to use again, another freeflight to Hong Kong in that year.

Damage repair 1 She brought over a bit of water on a linen serviette and sort of (mimes wiping spilt food from clothes).

a An example refers to an individual incident raised by participants, regardless of the number of text units (amount of participant speech)associated with that incident

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Dis(satisfied) 3 I was really dissatisfied with this baggage masters patheticattitude.

Cheated 1 [I felt] ripped-off; honestly I felt that the travel agent should havehad up to date information. They said its been like this formonths.

Laughed incidentaway

1 I was steaming and puffing, but in the end you know I was makinga joke about it.

Exhausted 1 The plane was right on the other side of the airport it was such along time to walk and it was really a long way to go I got backon the plane feeling exhausted.

aOne example may have multiple affect descriptions.

Thinking About Service Failures and Recovery Processes

In response to the questioning concerning counterfactual thinking, participants suggested a variety ofactivities and approaches for service recovery that tourist and hospitality organisations could and/orshouldhave used. Participants also shared how they thought they wouldhave felt if such activities and

approaches had actually been used.

Issues related to distributive justice

Data that relate to issues of distributive justice are outlined in Table 5. The information reported inTable 5 illustrates the kind of thoughts that ran through customers minds in response to either servicefailures or poor service recovery processes.

Table 5: Summary of Content Relating to Counterfactual Thinking of Potential Service Provider

Actions & Approaches Distributive Justice

Description of

ImaginedAlternative

Number of Associated

Participant Examples

Sample Participant Comment

(shoulds or coulds)

Core servicereplacement

6 All I needed was the towel! There was nothing else. Ididnt want compensation . I mean it was really, reallysimple.

Apologies 5 There should have been at least a letter of apology thatsaid, Sorry you were stuck in the transit lounge for 24hours! .

Accommodation 2 Accommodation put them up overnight. Once they knewthat [the delayed flight] was going to be more than three orfour hours delay, they should have at least given them somegood facilities.

Damage repair 1 They should be the person who steps in and says, youknow, Send me your dry cleaning bill .

Refund 8 He could have said, in fact, that the simplest thing for himwas to refund the money we had paid, and he would haveno obligations, wed go and set it up ourselves. That wouldhave been the simplest thing.

Beverages 1 They should be the person who steps in and says, youknow here, have a free drink .

Food 2 but they could have given me a free meal or somethinglike that.

Transport bus 4 Bus [stranded passengers] yes [although] that would be

a logistical nightmare.

Air travel voucher 1 But airlines never give you back what you lost. What theydo is they issue you with a warrant for further travel, valued

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Chapter 5

Conclusions

This exploratory study has investigated how people perceive the service failure and recovery processwhen the provision of service is somehow deficient. It sought to better understand how people thinkabout such events. The discussions revealed that there are a lot of opportunities for firms to improvethe way they deal with service failure events. In particular, the results showed that people are easilyable to think of better ways of being treated and this impacts upon their emotional status and level of(dis)satisfaction.

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APPENDIX A: FOCUS GROUP FORMAT

INTRODUCTION

Welcome; introductions

Explanation of research objectives:

Today will be looking at problems people have had as tourists (transportation,accommodation, entertainment, etc.)

Understanding of when things fail:- what actually happens- what it feels like- what sorts of things that have happened to you

Each one of you to explain a situation that has happened

Then Ill ask you some questions to try and understand things a little better

At the end have more of a group discussion about some of the specific issues we are looking atin this research

Prefer focus group not to be too formal relax and enjoy!

INDIVIDUAL ACCOUNTS

Ask for first volunteer to raise situation (WHAT)(Then go through the following process for each individual situation until saturated.)

How did you FEEL in that situation? (baseline for comparisons with WOULDS)

How significant/severe was this experience? (WOULDS magnitude/degree of importance of event)

Who was/is accountable for that experience? (COULDS discretionary conduct)

To what extent did they try to be fair? (i.e. did they try to be fair, and how hard did they try?)

(COULDS effort => intention)

Did they have a choice? (COULDS volitional acts)

Was it feasible for them to act differently? (COULDS note relational variables of trust, statusrecognition, neutrality with regard to intentional vs. accidental failure)

What could have happened instead/what alternative scenario could have occurred? (COULDS noterole of those accountable)

What should (or should not) have happened in this situation? (SHOULDS moral imperative)

What would most people have done in this situation? (both service provider and customer)(FAIRNESS/NORM THEORY)

Repeat for each breakdown situation.

COUNTERFACTUALS

Then:

One of the concepts that we are looking at in this research is counterfactual thinking, whichliterally means counter to the facts. In this context, we use counterfactual thinking to meanbringing alternative versions to mind of what might have happened in the situation, asopposed to the reality of what actually is.

Some evidence that this occurs in service failures (FOR EXAMPLE.). So now have some questionsto put to the group:

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Author

Prof Beverley SparksBeverley Sparks is a Professor with the School of Tourism and Hotel Management at Griffith University. Sheholds a Bachelor of Arts, Graduate Diploma of Business (Tourism & Hospitality) and a PhD (Management).Beverley is an active researcher in the area of services marketing and management, and has several publications

in top quality journals. She is on the editorial board of three international journals: Cornell HRA Quarterly,International Journal of Contemporary Hospitality Management and Hospitality and Tourism Research Journal.Beverley has a keen interest in the timeshare industry and has been instrumental in the development of studies inthis area at Griffith University. She has worked closely with relevant industry bodies within Australia andbeyond in order to advance the timeshare sector. Beverley held the position Head of School Tourism and HotelManagement at Griffith from January 1996 through to July 1999; she was the Dean International at GriffithUniversity from August 2000 through until October 2003; she currently holds the position of Director,International Centre of Excellence in Sustainable Tourism Education. Email: [email protected]

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Documents

CUSTOMER PERSPECTIVES ON SERVICE FAILURES